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Shortest recession on record!

Economy
Published June 15


V-shaped recovery coming from sharpest, shortest recession on record: Morgan Stanley


The global economy will return to pre-coronavirus output levels by the end of the year, according to economists at Morgan Stanley.
Significant policy support has ensured that while the current recession is sharper than the one experienced during the 2008 global financial crisis the recovery will be faster, they said.
“We have greater confidence in our call for a V-shaped recovery, given recent upside surprises in growth data and policy action,” wrote Chetan Ahya, chief economist at Morgan Stanley. “The global economy bottomed in April and the recovery will gather further momentum, making this a short recession.”


https://www.foxbusiness.com/markets/v-shaped-recovery-sharpest-shortest-recession-morgan-stanley

 

 Hopping off the train could be hazardous to your wealth.

veni vidi vici vti
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Re: Shortest recession on record!

Here is another perspective based on the recent forecast by the Federal Reserve as reported in the NYT:

"In their first economic projections this year, Fed officials indicated that they expected the unemployment rate to end 2020 at 9.3 percent and remain elevated for years, coming in at 5.5 percent in 2022. Output is expected to be 6.5 percent lower at the end of this year than it was in the final quarter of 2019.

The new forecasts predict a much slower path back to economic strength than the Trump administration — and perhaps the stock market — seems to expect as the economy climbs out of a virus-spurred downturn.

“The ongoing public health crisis will weigh heavily on economic activity, employment, and inflation in the near term, and poses considerable risks to the economic outlook over the medium term,” the Fed said in the post-meeting statement that accompanied the data outlook."

But, good luck,

Fred

 

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Re: Shortest recession on record!


@fred495 wrote:

Here is another perspective based on the recent forecast by the Federal Reserve as reported in the NYT:

"In their first economic projections this year, Fed officials indicated that they expected the unemployment rate to end 2020 at 9.3 percent and remain elevated for years, coming in at 5.5 percent in 2022. Output is expected to be 6.5 percent lower at the end of this year than it was in the final quarter of 2019.

The new forecasts predict a much slower path back to economic strength than the Trump administration — and perhaps the stock market — seems to expect as the economy climbs out of a virus-spurred downturn.

“The ongoing public health crisis will weigh heavily on economic activity, employment, and inflation in the near term, and poses considerable risks to the economic outlook over the medium term,” the Fed said in the post-meeting statement that accompanied the data outlook."

But, good luck,

Fred

 


 

Jun 15, 2020,10:16am EDT

Jerome Powell’s Tone Is Grim But He Forecasts The Economy Recovers In 20 Months

Federal Reserve Chairman Jerome Powell spoke last week predicting a “long road” to economic recovery. Powell’s speech came shortly after U.S. Bureau of Labor Statistics released unemployment data for May indicating civilian unemployment dropped from a peak of 14.7% at end of April to 13.3% at end of May. Powell acknowledged the improvement in the unemployment rate but foreshadowed that the GDP would shrink by 6.5% in 2020. Along with Powell’s speech, the Federal Reserve published an economic forecast for 2020 to 2022. While the outlook for 2020 was grim, the forecast for 2021 suggests this will be one of the fastest recoveries in memory.

veni vidi vici vti
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Re: Shortest recession on record!

Not hopping on or off any trains; but being cautious and conservative at this juncture will pay off.  

Just me.

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Re: Shortest recession on record!

If the downturn is less than 6 months (2 quarters) it isn't/wasn't a recession, by definition!  So far, we've probably got one quarter under our belt and Q22020 looks to be the second!  However, if Q3 also comes in negative, that would be a 3 quarter, 9 month recession.

Since 1926, there has been 1 short 6 month recession (1980), 4 at 8 months (1945, 1958, early 1990s, and early 2000s).

gdp1q20_2nd_chart.jpg

ElLobo, de la casa de la toro caca grande
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Re: Shortest recession on record!


@Bentley wrote:

Economy
Published June 15


V-shaped recovery coming from sharpest, shortest recession on record: Morgan Stanley


The global economy will return to pre-coronavirus output levels by the end of the year, according to economists at Morgan Stanley.
Significant policy support has ensured that while the current recession is sharper than the one experienced during the 2008 global financial crisis the recovery will be faster, they said.
“We have greater confidence in our call for a V-shaped recovery, given recent upside surprises in growth data and policy action,” wrote Chetan Ahya, chief economist at Morgan Stanley. “The global economy bottomed in April and the recovery will gather further momentum, making this a short recession.”


https://www.foxbusiness.com/markets/v-shaped-recovery-sharpest-shortest-recession-morgan-stanley

 

 Hopping off the train could be hazardous to your wealth.


Here is someone who has already written his get out of jail clause, just in case he is wrong.

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@Bentley wrote:

Economy
Published June 15


V-shaped recovery coming from sharpest, shortest recession on record: Morgan Stanley


The global economy will return to pre-coronavirus output levels by the end of the year, according to economists at Morgan Stanley.
Significant policy support has ensured that while the current recession is sharper than the one experienced during the 2008 global financial crisis the recovery will be faster, they said.
“We have greater confidence in our call for a V-shaped recovery, given recent upside surprises in growth data and policy action,” wrote Chetan Ahya, chief economist at Morgan Stanley. “The global economy bottomed in April and the recovery will gather further momentum, making this a short recession.”


https://www.foxbusiness.com/markets/v-shaped-recovery-sharpest-shortest-recession-morgan-stanley

 

 Hopping off the train could be hazardous to your wealth.


            I’ll stick with the Feds, the economic professionals with the knowledge and tools to help an economy instead of the financials gypsies with their crystal balls. If this is short or a “record” great. Tweets, the populations lack of trust, spikes in cases as the lockdown eases worldwide, a promising vicious election and no vaccine yet promises to modulate your train speed. I’am just on the tour bus with the oldies socially distanced until the next restroom break and eating a box lunch. Probably a tortoise and hare economy taking another 2-3 years out of your retirement life.

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@steelpony10 wrote:

@Bentley wrote:

Economy
Published June 15


V-shaped recovery coming from sharpest, shortest recession on record: Morgan Stanley

 


            I’ll stick with the Feds, the economic professionals with the knowledge and tools to help an economy instead of the financials gypsies with their crystal balls. ........... Probably a tortoise and hare economy taking another 2-3 years out of your retirement life.


 

 

OK, we agree; one of the fastest recoveries in memory!

 

"Along with Powell’s speech, the Federal Reserve published an economic forecast for 2020 to 2022. While the outlook for 2020 was grim, the forecast for 2021 suggests this will be one of the fastest recoveries in memory."

 

veni vidi vici vti
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Re: Shortest recession on record!

I'm an older guy but I still invest for the future--whatever the forecasts say.

Mind you: I have and will continue to maintain a relatively conservative allocation. 

May everyone prosper.

Bob

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@Bentley wrote:

@steelpony10 wrote:

@Bentley wrote:

Economy
Published June 15


V-shaped recovery coming from sharpest, shortest recession on record: Morgan Stanley

 


            I’ll stick with the Feds, the economic professionals with the knowledge and tools to help an economy instead of the financials gypsies with their crystal balls. ........... Probably a tortoise and hare economy taking another 2-3 years out of your retirement life.


 

 

OK, we agree; one of the fastest recoveries in memory!

 

"Along with Powell’s speech, the Federal Reserve published an economic forecast for 2020 to 2022. While the outlook for 2020 was grim, the forecast for 2021 suggests this will be one of the fastest recoveries in memory."

    That’s right. Tides out. Time to dig for clams before the train leaves. My memory only goes back to yesterday though when I put my golf shirt on inside out. No one noticed either but my lockdown partner for life.

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@51hh wrote:

Not hopping on or off any trains; but being cautious and conservative at this juncture will pay off.  

Just me.


I agree.

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@ElLobo wrote:

If the downturn is less than 6 months (2 quarters) it isn't/wasn't a recession, by definition!  So far, we've probably got one quarter under our belt and Q22020 looks to be the second!  However, if Q3 also comes in negative, that would be a 3 quarter, 9 month recession.

Since 1926, there has been 1 short 6 month recession (1980), 4 at 8 months (1945, 1958, early 1990s, and early 2000s).

gdp1q20_2nd_chart.jpg


A recession is not 2 negative quarters by definition. " A recession is a macroeconomic term that refers to a significant decline in general economic activity in a designated region. It had been typically recognized as two consecutive quarters of economic decline, as reflected by GDP in conjunction with monthly indicators such as a rise in unemployment. However, the National Bureau of Economic Research (NBER), which officially declares recessions, says the two consecutive quarters of decline in real GDP are not how it is defined anymore. The NBER defines a recession as a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.

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Re: Shortest recession on record!

bilperk, it seems like that definition has some wiggle room in it as to what is and what is not a recession. El Lobo's definition seems like more of a black line test that would not be subject to partisan debate.

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Re: Shortest recession on record!

I hope the economic pain ends as soon as possible.

Having said that, the picture looks quite bad: the Federal Reserve Bank of Atlanta forecasts a GDP growth of -45% for 2020 Q2 (LINK) and the NY Fed puts the growth at -19% for 2020 Q2 and -2% for 2020 Q3 (LINK). 

These numbers are fluid and will change for several weeks but, in the end, we will still have a huge constriction of the US economy in Q2. My question is, isn't it obvious that with such terrible GDP numbers for Q1 and Q2, the GDP is closer to go up in Q3 or Q4 than keep going down? Kind of the economic damage caused by the pandemic already riched its bottom after we passed the peak. Of course, all bets are off and further constriction will occur if COVID numbers go back up to those seen at the peak (over 30K new cases and 2K deaths per day). 

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I really hope all sunshine continues to shine. I'm sitting on 5-15% less equity than normal. I'm usually 45-60%. This is because I'm not as cheerful as some of you about the future. It's also because I'll have less income from touring/gigging so I'm taking less risk in general. I've said this before, but this kind of talk seems like tempting fate in the opposite direction. Either way I'll be prepared, (until someone smashes me in the mouth).

 

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@CarlosDS wrote:

My question is, isn't it obvious that with such terrible GDP numbers for Q1 and Q2, the GDP is closer to go up in Q3 or Q4 than keep going down? Kind of the economic damage caused by the pandemic already riched its bottom after we passed the peak. Of course, all bets are off and further constriction will occur if COVID numbers go back up to those seen at the peak (over 30K new cases and 2K deaths per day). 


 

Under these highly uncertain and unpredictable circumstances that you describe, my question is, isn't the stock market currently overvalued?

I happen to share the concerns of dtconroe who stated on another thread that "I also am expecting volatility to be a theme in the second half, as we start dealing with the reality of bankruptcies, unemployment, state and city governments facing major cuts to compensate for their revenue losses, the political campaigns, and a coronavirus pandemic that will continue to have a dampening affect on many business areas."

I am a retired investor, and my time horizon is rather limited to make up any significant losses. Hence, until  the proverbial dust settles, I feel more comfortable protecting my portfolio by investing in fairly low risk bond fund categories at this time.

Good luck,

Fred

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My question is, isn't it obvious that ....”

Not to me. Nothing is “obvious”. And I don’t trust anybody who thinks it is.

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Interesting Part 2 (second week) interview on Consuelo's website.  David is sometimes called a perma bear.  But I like to listen to both sides of things.  Don't forget to check out the Web Extra at the end.  

link

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@PaulR888 wrote:

Interesting Part 2 (second week) interview on Consuelo's website.  David is sometimes called a perma bear.  But I like to listen to both sides of things.  Don't forget to check out the Web Extra at the end.  

link


Rosenberg is indeed a perma-bear and has been wrong more times than I can count. Still, that doesn't mean he's wrong this time.

However, I don't think his arguments are credible. He points out that a rally in the face of massive unemployment is unprecedented and argues that we're seeing a short-covering rally driven by the conviction that the Fed has got our back.

Yes, we have sudden massive unemployment because of the nature of the problem, but also the potential for a rapid recovery. Yes, confidence in the Fed, but with good reason. Stock markets are forward looking; and, at present, bonds yield almost nothing. Money is plentiful and investors prefer equities over < 1% yield.

Rosenberg's other argument seems to be that a vaccine won't work. Well, why not?

I expect continued volatility and stopped buying at early April levels. But, it's a bit facile to insist that we're just seeing a bear market rally.

N.

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@PaulR888 wrote:

Interesting Part 2 (second week) interview on Consuelo's website.  David is sometimes called a perma bear.  But I like to listen to both sides of things.  Don't forget to check out the Web Extra at the end.  

link


It was worth spending 10 minutes to watch. He makes some good points. I guess I should short bread (Bimbo Bakeries BIMBOA.MX?) and buy pharmacy and biotechs. Well, actually, I have been buying VGHAX and XBI the last couple of months.

He thinks financials will be “decimated” by zero interest rates. Can’t they make money any other way besides lending? I have a small holding of JPM, but I don’t want to sell it and pay heavy CGs. My cost basis is $40.47 even with dividends reinvested.

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